Frontier Airlines EarlyReturns - Why Frontier filed for bankruptcy

Here's a good layman's explanation of how First Data's increase in "holdback" of credit card receipts caused Frontier to file for Chapter 11.

How Holdbacks Brough Down Frontier Airlines (http://www.portfolio.com/views/blogs/market-movers/2008/04/15/how-holdbacks-brought-down-frontier-airlines)

Here's a good layman's explanation of how First Data's increase in "holdback" of credit card receipts caused Frontier to file for Chapter 11.

How Holdbacks Brough Down Frontier Airlines (http://www.portfolio.com/views/blogs/market-movers/2008/04/15/how-holdbacks-brought-down-frontier-airlines)

Those holdbacks can be a killer, I worked at a place where incresed holdbacks pretty much killed the business, that was a 15 people computer supply shop, not an airline ... but not having cash you were planning on having is never a good thing.

Here's a good layman's explanation of how First Data's increase in "holdback" of credit card receipts caused Frontier to file for Chapter 11.

How Holdbacks Brough Down Frontier Airlines (http://www.portfolio.com/views/blogs/market-movers/2008/04/15/how-holdbacks-brought-down-frontier-airlines)

Thank you so much for posting this - my prior knowledge on this topic was about 70% accurate; the article cleared up a couple of areas where I was confused.

Thanks to the OP for posting^ Very good and informative article....I was somewhere a bit higher with my understanding because I know how airlines use "charge backs" on travel agents

The relationship between an airline and its acquiring bank is one of the three most important relationships that an airline has: the other two are with a global distribution system, for ticketing, and with a jet fuel supplier.Oh really? And how about the relationship between an airline...and its customers? Just a teensy bit more important than any of these. :td: to the author.

The article indicates that it wasn't First Data's holdback that drove Frontier into bankruptcy - it was the increase in holdback. First Data almost certainly has the contractual right to increase holdback. The question is, why was the holdback increased?

Was this just a knee-jerk reaction to the high price of fuel and recent failing of several other airlines, or did First Data have some specific indication that Frontier was in trouble?

The article indicates that it wasn't First Data's holdback that drove Frontier into bankruptcy - it was the increase in holdback. First Data almost certainly has the contractual right to increase holdback. The question is, why was the holdback increased?

Was this just a knee-jerk reaction to the high price of fuel and recent failing of several other airlines, or did First Data have some specific indication that Frontier was in trouble?


From everything reported in the Denver press, it was a knee jerk reaction.


If it was a specific indication, I'd like to know and note that F9 was putting out in the financial press that they had plenty of cash on hand for the next several months.